Retail realty commands unreal prices
KOLKATA: Believe it or not, it is at least twice as expensive to lease retail space in Kolkata than Bangalore or Hyderabad. There are even instances of property in the city commanding as much rent as one in Mumbai or Delhi.
“I can get a retail property in Bangalore or Hyderabad for Rs 50/sq ft. But the situation is peculiar in the east. In a place like Patna, realtors are demanding Rs 100/sq ft. In Kolkata, it is obviously higher than that,” Reliance Trends senior vice-president (operations) Akhilesh Prasad said on Wednesday.
He was among several top officials of retail firms who came down heavily on artificially jacked up realty rates in Kolkata and rest of the east. Speaking at the East India Retail Summit, they said the deliberate cartelization of real estate players in the city kept other players out of the market and controlled the quantum of development in a manner that ensured the demand-supply situation was always skewed.
According to market trackers, lease rentals in Kolkata and its outskirts range from Rs 50/sq ft to Rs 350/sq ft with the average rate hovering around Rs 200. While vanilla stores in Garia go for Rs 50/sq ft, Forum Courtyard – the premium mall on Elgin Road – commands Rs 350/sq ft. The average rate in Mumbai and Delhi is around Rs 350 with some prime properties in the commercial capital going for as high as Rs 1,000/sq ft.
RP-Sanjeev Goenka Group general manager Sanjeev Mehra, who was earlier at the helm of South City Mall, pointed out that while real estate prices recorded a cyclical trend of hitting the roof and then bottoming out, it strangely remained firm all through in Kolkata. And this, he felt, affected growth of retail in the city and elsewhere in the region.
“We do not have enough brands in the city. We need to be more open and attract more brands to differentiate between malls,” he remarked.
Multiplex chain Cinepolis has been scouting for properties in the entire region but has had difficulty finding them. The company’s business development head, Bimal Sharma, felt the east would lose out if it did not get its real estate strategy straight.
Prasad agreed: “Retail growth in Kolkata is far behind other metros. The market exists but there is no real estate for retailers to move in. The city needs at least 20 more malls to be on a par with other cities in offering customers a proper retail experience. There is a crying need for quality retail space.”
Apparel firm Turtle’s chief strategist L Sridhar, too, felt the realty rates in Kolkata were a tad too high. “Compared to Hyderabad, real estate prices are at least 20% more in Kolkata. The only reason we will continue to invest here is because the growth prospect is very high in Kolkata,” he said.
A realty major acknowledged that prices in Kolkata were unnaturally high due to supply constraint but denied it was due to cartel. “There is collaboration in the market but I don’t think there is cartel formation. Rarely will you see five real estate players coming together to do a high-ticket project like it happens in Kolkata,” he said, referring to South City project on Anwar Shah Road and Urbana in Chowbagha.
The situation is further compounded by a high 95% occupancy at malls in the city. With only RPG Galleria under construction at present, the supply crunch situation will persist.